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Administration July 17, 2023
DOL Seeks Independent Fiduciary for 401(k) Plan of Closed NY Construction Company
When L D Wenger Construction Co. Inc. ceased operations, its 401(k) plan was deserted by the fiduciary, barring retirement plan participants from access to their retirement assets, the Department of Labor alleges.
Reported by Noah Zuss
A New York building contractor abandoned the 401(k) retirement plan for employees—comprising $597,325 of retirement assets for seven participants, as of the most recent data available—after the business was closed in 2017, the Department of Labor alleged in a complaint filed July 11 in U.S. District Court for the Eastern District of New York.
The DOL, in the name of Acting Secretary of Labor Julie Su, alleged three counts of fiduciary breach under the Employee Retirement Security Act against defendants L.D. Wenger Construction Co. Inc. 401(k) Plan and plan administrator and fiduciary David Wenger, the complaint shows.
The plan was not terminated, and no individual or entity has assumed fiduciary responsibility for the plan or to distribute the plan’s assets to its participants after the Plainview, New York-based business ceased operations, the complaint shows.
“Wenger has failed to wind down the plan,” the complaint states. “As such, no assets can be distributed to participants without a duly appointed fiduciary.”
The lawsuit requests the court order Wenger’s removal as fiduciary and appointment of independent fiduciary to distribute the plan assets and terminate the plan, the complaint shows. The lawsuit is Julie A. Su v. L D Wenger Construction Co Inc. 401(k) plan and David Wenger.
“Without a duly appointed trustee or other fiduciary of the Plan to instruct an asset custodian to distribute the Plan’s assets, the Plan’s participants are unable to obtain distributions of funds from the Plan,” the complaint says.
The plan was established at some time “prior to 2010” to provide retirement benefits to the company’s employees, the DOL complaint shows. Wenger signed the plan’s annual Form 5500s filed with the DOL between 2010 and 2016.
The DOL also requested a court judgment ordering that any expenses associated with the appointment of the independent fiduciary and subsequent administration and termination of the plan be charged to Wenger and ordering such further relief as is appropriate and just.
The defendants did not comment on the litigation.
This is the third complaint filed by the DOL in 2023 against plan sponsors that abandoned responsibility for their plan when the company went out of business, following cases in Michigan and Arizona.